“In simple terms, the bidder will have to say how much of debt would the probable bidder take and the cost they would pay for the airline,” said aviation secretary Pradeep Singh Kharola.
Air India divestment: Deadline extended to December 14 with revised bidding norms
New Delhi: As the government further extends the last date for bidding on Air India from October-end to mid-December, the government has decided to sweeten the deal a little to get takers for the national carrier, as COVID impacts aviation across the globe. As part of the new deal, the government allows interested parties to bid for the enterprise value of the airline.
“Under the new rules, the bid would be on enterprise value. In simple terms, the bidder will have to say how much of debt would the probable bidder take and the cost they would pay for the airline,” said aviation secretary Pradeep Singh Kharola.
He added that the enterprise value has a suggestion. “Of the total bid amount, about 15% would be given to the government as price of Air India and the rest 85% will be debt that the winning bidder will take,” he said.
DIPAM secretary Tuhin Kumar Pandey added that the changes have carried out due to an uncertain environment that has been brought due to COVID, which has impacted travel across the globe including India.
“While the minimum that a bidder has to offer as price of the airline to the government is set at 15%, no rules bar the prospective bidder to offer more than 15% of their total bid as price of the airline,” said Pandey.
He added that the liabilities of the airline will be absorbed by the government as planned earlier.
The government, which did not get any bids for the national carrier in 2018, called for bids again in January this year to sell its stake in Air India, Air India Express and 50% of ground handling company, AISATS.
The government, which had reduced the airline's debt to Rs 23,286 crore from Rs 62,000 crore in order to make it more attractive to suitors, has now left it on the bidders to decide on it through the bidding process.
As Covid-19 has impacted businesses across the globe, including aviation, the interest in Air India privatisation has not been satisfactory, leading to the government extending the deadline for submission of interested bids more than once.
However, the government expects that the deal would be completed by December of this year.
“There is interest in the airlines for players, who are serious about aviation. And all these changes have been brought basis suggestions from those players and the consultants,” said aviation minister Hardeep Singh Puri.
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